Who should run GM? Here's a vote for Lou Gerstner

Remember General Motors? Taxpayers own 60% of this former world leader in cars, trucks and the like. Back in the 1950s, GM controlled half the market, but by the time it filed for bankruptcy in June 2009, that share collapsed to 19.5%. And between 2000 and 2009, GM's board kept on supporting CEO Rick Wagoner, oblivious to his performance.

How so? Under Wagoner, GM's stock's value was completely wiped out, and its 2004 to 2008 losses totaled $88 billion, according to Bloomberg News. It makes you wonder why GM had a board at all.

Now that GM is privately held, it has new directors -- including some private equity executives. And that board picked the former head of AT&T (T), Ed Whitacre, as its chairman. He put Wagoner's successor, Fritz Henderson (a GM lifer), under a 100-day review, which -- surprise, surprise -- Henderson failed. Whitacre, which Bloomberg describes as a young 68, is now eager to make his mark on GM.

Before getting into who should run GM, let's look at what Henderson did (or did not do) to get himself fired. Henderson's track record was mixed -- he supported GM's July 2009 reemergence from bankruptcy with $50 billion in federal aid. And GM reported third quarter cash generation of $3.3 billion on a $1.15 billion loss, according to Bloomberg.

A Long Search Ahead

But the source of Henderson's hanging appears to have been GM's failed deals and a bleaker short-term future. Specifically, plans to sell the Saturn and Saab brands fell apart, and in November GM decided to keep Opel rather than to shed it. Also, Henderson forecast that GM would start to consume cash again in the fourth quarter, according to Bloomberg.

Whether it was right to fire Henderson is now a moot point because Whitacre -- who appears to enjoy power but knows little about autos -- is probably going to be running the company for at least the next year as GM struggles to find a chief exec with the right skills.

Many have mentioned Ford Motor (F) CEO and former Boeing (BA) executive, Alan Mulally as the right person to run GM, and I agree he would be a strong candidate. (As I've posted, I like Mulally as a replacement for James McNerney as Boeing's CEO.)

But why would Mulally want the headache? He would be jumping from a company that's unhampered by government intrusion and is doing relatively well to one that must change the painfully slow decision-making process that contributed to its failure -- about which I posted -- and is under enormous pressure to boost performance so GM can go public as soon as 2010.

Another Big Blue-ish Turnaround?

The right CEO for GM would need to combine a track record of successful big-company turnarounds with the ego to believe that he or she could overcome the incredibly daunting challenges that GM faces. (I don't think that the right person would be motivated by money, so the government pay restrictions are a relatively minor issue.)

As I've posted, I like Louis Gerstner for the job -- his turnaround of IBM (IBM) suggests he's up to the task. He took IBM when it was running short on cash in 1993 and brought it back to its former prominence by the time he left. In June, Gerstner opined on the GM situation, which suggests he hasn't lost his ego and might have the fight left for tackling its CEO position.

For America's sake, I hope he does.

Peter Cohan is amanagement consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.

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